WITH BEN HIRSCHLER
LONDON Sun Nov 30, 2014 – REUTERS
(Reuters) - Sources familiar with the matter said on Sunday GlaxoSmithKline this week notified staff it was laying off hundreds of workers in its biggest market, in execution of a major savings program the drugmaker is set to roll out.
The head of the British drugmaker announced on Oct. 22 its third-quarter results and that the new restructuring scheme would save £1 billion ($1.56 billion) in annual costs over three years, but has yet to say where will the staff cut fall.
The sources said staff in the US, where GSK is struggling with declining sales of respiratory medicines, will be briefed by the Director of Medicines, Deirdre Connelly, on Wednesday changes, starting in North America
A GSK spokesman declined to go into details but said the aim of the restructuring program was to improve performance by reducing complexity and embodying a smaller, more focused and lower cost organization.
He said in an email statement that “Every business unit is looking at how to respond to this challenge. When we proposed, first of all to share these initiatives with our employees”.
Medicines used to treat respiratory problems have traditionally been GSK's strongest business, and Advair® – an inhaled therapy for asthma and chronic lung disease – is its fastest growing product. But US sales of Advair® caíram are also falling, while new pulmonary drugs Breo and Anoro are proving slow to get off the ground.
Advair has been hit by competition from rivals and a growing trend by US health insurers to use aggressive tactics to get into slashing prices for older drug companies' products.
French drugmaker Sanofi has reported similar pressure from US insurers on the diabetes market.
US insurers, who are under pressure to keep premiums in check, are pushing particularly hard on drug prices in areas like diabetes and respiratory disease where there are multiple options for doctors and patients.
GSK's restructuring operation in the US was designed to defend the company's margins in this challenging market. The structural changes will also take into consideration the shift of staff to some oncology drugs, which are taking over in GSK, following a complex agreement with Switzerland's Novartis.
(Reporting by Ben Hirschler; Editing by Jon Boyle)
Related news: GSK: restructures pharmaceutical sector to cut costs. -59% 3rd quarter profit
